Franklin Mutual Glbl DiscvA(acc)USD |
Morningstar's Take
|05/03/2024by Greg Carlson
| Franklin Mutual Global Discovery’s performance has rebounded since a team shakeup in late 2020. But it’s not clear the team can consistently execute. The team behind this strategy has changed substantially. In November 2020 Peter Langerman, then Franklin Mutual’s CIO and a longtime manager of this portfolio, announced his 2021 retirement, and three other senior managers on the team departed. In February 2024, Katrina Dudley, who took Langerman’s place as a manager here while also serving as a manager on two non-U.S. equity strategies, left for another role at Franklin. Christian Correa, a comanager of this fund since 2018 who replaced Langerman as CIO, remains on board, as does Tim Rankin, a comanager since 2010. Five analysts have been hired to replace the members who left; all but one of the departures also previously covered stocks. However, most of the additions are much less experienced than their predecessors. Each has since become a contributor to the team’s four core strategies, including this one. And the team has added value at this strategy in each of the past three calendar years versus its internal benchmark, the MSCI World Value Index, through security selection. As a result, the US fund’s Z shares have surpassed most of its global large-value stock Morningstar Category peers, as well as that index and the category benchmark, on total and risk-adjusted returns since the late 2020 personnel changes. But it’s not clear that the strategy has a long-term edge. Security selection has fallen short compared to the team’s benchmarks on the other three core strategies, including another global value mandate (Franklin Mutual Beacon). This deficit occurred during a time when all four strategies have run more-compact equity portfolios, thus shining a brighter spotlight on stock selection. The number of stocks this portfolio holds has dropped by more than half to less than 55 since 2015. The approach now is also a bit less flexible than it once was. The managers are less likely to build cash when opportunities are scarce, a tactic that sometimes provided a cushion in downturns. |
A revamped team has found early success here but has struggled elsewhere.To find out how Morningstar rates a fund click here.
| Morningstar Pillars | |
| People | Average |
| Parent | Average |
| Process | Average |
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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